I'm Matt Schifrin vice president and managing editor of Investing for Forbes Media. I have worked for Forbes for more than 25 years and learned business journalism under Forbes’ late great editor Jim Michaels. For the first 15 years of my career, I wrote mostly investigative features but now I am responsible for investing and finance content in Forbes Magazine and on Forbes.com. I'm also editor in charge of Forbes Newsletter Group and Forbes iConferences and I used to run Forbes Best Of The Web. I won a SABEW award in 2012 and a MIN Best of The Web award in 2009. My book, The Warren Buffetts Next Door, The World's Greatest Investor You've Never Heard Of was published in 2011. I am a graduate of Cornell University.

Preferred Apple Idea: Ignore Einhorn And Buy Netflix

Forget all of the smoke that hedge fund manager David Einhorn is blowing right now about Apple and its proposal to eliminate its ability to issue preferred stock. This really isn’t about preferred stock. Fact is, virtually no successful technology company is a preferred stock issuer.

I asked the founder of Preferredstockchannel.com to identify tech companies that have preferred stock outstanding and the only one they could come up with was Unysis (UIS), which is more of a technology service company and has been struggling of late.

“Preferred stock is not a good way to finance a business, especially for a successful company,” says Richard Lehmann, chairman of the Bond Investors Association and longtime editor ofForbes/Lehmann Income Securities Investor. ”It’s mostly used as a way to access capital without impairing a company’s credit rating.”

Apple clearly doesn’t need cash, or access to more capital, and unlike interest payments on bonds, preferred stock payments to shareholders are not tax deductible. If Apple wanted cheap money it would issue bonds the way both Microsoft and IBM have recently, at laughably low interest costs. Last year Microsoft issued about $2.2 billion in bonds at coupons ranging from 0.875% to 3.5%. IBM has recently been issuing floating rate debt at costs under LIBOR.

Like other hedge fund managers, Einhorn is a large shareholder of Apple stock [full disclosure: I am a long time owner of Apple shares as well] and he is trying to agitate some action that will help shares recover some of the $200 billion in market capitalization that Apple has shed in recent weeks.

As a shareholder, I would certainly be pleased if Apple became more aggressive buying back stock, but what might be more exciting is some kind of bold strategic acquisition. Using a Peter Lynch–buy what you know approach–I have lately been thinking that Netflix would be a good option for Apple. I am not a shareholder of Netflix but I am a streaming subscriber and I have noticed that my whole family’s usage of the service, through Apple TV, laptops and iPads, has increased significantly over the last few months, as each of us dig into Netflix’ abundance of dated TV series, movies and documentaries. There really is a treasure trove of good content on Netflix, it just takes some digging to find.

Netflix has more than 33 million subscribers paying at least $7.99 per month and it has recently begun producing its own content, like House of Cards starring Kevin Spacey and Kate Mara (which I binged watched last weekend). It’s not a bad model for Apple to adopt, especially given the 400 million plus people who already use its iTunes/App store on devices ranging from iPhones and iPad minis to Apple TVs. It would certainly would play well to the growing “cut the cable” crowd.

I hear “experts” on CNBC talking about Apple as a product company all the time, but I really believe that equally important to Apple’s ascendance has been its superior software, namely iTunes including its App store, where you can rent and watch movies and TV shows, on a pay-per-view basis.

In the most recent quarter iTunes accounted for $3.68 billion in revenues or about 7% of overall sales. A Netflix addition to this could be meaningful, especially when you consider the potential to expand to 400 million active iTunes users. Even with the recent run up in shares Netflix has a market capitalization of only $10 billion, which of course would barely make a dent in Apple’s growing $137 billion cash hoard.

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Apple could probably move a billion in cash at Netflix and have a great partnership, but that same billion could transform iTunes, alternatively. Netflix’s deals with the television and movie industry are the only thing Apple doesn’t have apparently … or do they and they just need a separate on-demand deal? The stakes are huge. I’d cheerfully give up my cable bill if itunes and Netflix were a little slicker and had more current content.

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